Hedge funds continued their strong run in October, with the HFRI Fund Weighted Composite Index (FWC) advancing for the sixth consecutive month, led by Macro and Healthcare-focused strategies, according to new data from hedge fund fund index and analysis specialist HFR.
The HFRI FWC rose 0.7% in October, while the HFRI Asset Weighted Composite Index added 0.9%, extending a rally that began earlier in the year and follows the strongest quarterly return for over four years in Q3 2025.
Macro strategies outperformed across asset classes, driven by equities, metals, and currencies. The HFRI Macro (Total) Index gained 1.3%, with the HFRI Macro: Commodity Index jumping 2.7%. Systematic, trend-following macro strategies also performed strongly, with the HFRI Macro: Systematic Diversified Index up 1.5%.
Healthcare-focused equity hedge funds delivered standout returns, with the HFRI EH: Healthcare Index surging 8.0%, pushing five-month gains to 32.5%. Energy and technology sub-strategies also posted positive returns, contributing to the HFRI EH (Total) Index leading all strategies year-to-date with a 14.2% gain.
Event-driven strategies saw moderate gains, led by credit arbitrage and distressed/restructuring positions, while fixed income-based relative value strategies benefited from the US Federal Reserve’s interest rate cuts. The HFRI Relative Value (Total) Index rose 0.8%, with sovereign and volatility-focused sub-strategies up 1.6% and 1.5%, respectively.
Liquid alternative UCITS funds also advanced, with the HFRX Market Directional Index gaining 2.2% and the HFRX Macro/CTA Index up 1.4%, driven by systematic macro strategies.
Kenneth J. Heinz, President of HFR, noted: “Hedge funds extended gains for the sixth consecutive month, the longest stretch since 2021, with leadership from Macro strategies and specialised Healthcare exposures.
“Despite heightened volatility from interest rate uncertainty and technology valuations, including AI-focused positions, broad performance was supported by uncorrelated strategies and fixed income relative value trades, reducing overall portfolio volatility. As institutions increase allocations to leading managers, we expect industry capital to reach new records into 2026.”
The October results highlight the industry’s ability to navigate heightened market volatility, including tariff concerns and technology sector uncertainty, while benefiting from ongoing macro, M&A, and sector-specific opportunities.
Approximately two-thirds of hedge funds reported positive performance in October, with top-performing funds in the FWC advancing 7.7%, while the bottom decile fell 5.6%, yielding a top/bottom dispersion of 13.3% for the month.
